Vietnam Money-Banks raise rates to bolster funds
HANOI - Several banks in Vietnam are raising deposit rates to secure funds to meet loan demand, but the central bank said it did not expect rates to rise by too much.
Some domestic banks said they planned to raise deposit rates on Vietnamese dong as soon as this month.
Dollar deposit rates have risen since the latest U.S. Federal Reserve rate hike on August 9.
State-run Bank for Foreign Trade, or Vietcombank, a key lender, said on Monday it has started raising dong deposit rates by between 0.24 and 0.6 of a percentage point.
"The rate raising trend has already begun and what we do is just to fulfill our fund-raising plan for the year," said a Vietcombank official in the Hanoi branch.
Semi-private bank Dong A, based in Ho Chi Minh City, raised dollar deposit rates between 0.2 and 0.4 of a percentage point from last Tuesday. It offers 12-month dollar deposits at 3.8 percent, up from 3.5 percent previously.
"The rate increase will slowly influence the interbank market and soften the rates there in a while as more funds come in banks," said a dealer with a foreign bank branch in Hanoi.
The central bank said last week that banks were facing a fund shortage given high demand for loans, but it did not expect rates to rise too much.
"From now until the end of the year, interest rates will not face any huge fluctuation thanks to the preparation by banks," Phung Khac Ke, central bank deputy governor, said last Thursday.
He said the rate of credit growth in recent months had been lower than the 25-percent growth target set for this year to ensure the economy expands 8.5 percent.
Bankers said they raised deposit rates also to help protect dong funds since consumer prices have been rising following higher oil prices.
The central bank has forecast inflation this year at up to 8.0 percent, lower than 9.5 percent last year.
While long-term loan rates have been stable, bankers said short-term cash demand had eased on the interbank market thanks to central bank supply.
As a sign of more fund availability, the central bank last week issued debt worth 1 trillion dong ($63 million), the first sale in several months.
On Monday, state-run banks offered overnight loans at 6.2-6.5 percent, compared with 6.0 to 6.6 percent last Monday.
Reuters - September 19, 2005.
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